Systems and methods for providing a mortgage with a sliding credit line

ABSTRACT

Systems and methods consistent with the present invention provide a mortgage with a primary credit line and a sliding credit line, such that the borrower may request to borrow from the sliding credit line as part of the original mortgage. In one embodiment, the method includes determining a level of risk associated with the borrower based on credit information of the borrower; establishing a first credit line based on the determined level of risk associated with the borrower, the first credit line being set as a debt of the mortgage; establishing a second credit line based on the determined level of risk associated with the borrower, the second credit line being set as a maximum to which the debt of the mortgage may be increased during the mortgage; and offering the mortgage to the borrower with the established first and second credit lines, such that a single first lien may serve as security for the first and second credit lines. Moreover, a mortgage lender may record the single first lien as the sum of the primary and sliding credit lines.

CROSS REFERENCE TO RELATED APPLICATIONS

This application is a divisional of pending U.S. application Ser. No.10/387,325, filed Mar. 13, 2003, entitled “SYSTEMS AND METHODS FORPROVIDING A MORTGAGE WITH A SLIDING CREDIT LINE,” which claims thebenefit of U.S. Provisional Patent Application No. 60/399,442, entitled“SYSTEMS AND METHODS FOR PROVIDING A MORTGAGE WITH A SLIDING CREDITLINE,” filed on Jul. 31, 2002, both of which are incorporated herein byreference.

BACKGROUND OF THE INVENTION

I. Field of the Invention

The present invention generally relates to financial systems and tosystems and methods for processing financial information. Moreparticularly, the invention relates to systems and methods for providinga home mortgage with an established credit line for the borrower.

II. Background and Material Information

When a lender provides a home mortgage loan to a borrower, the terms ofthe mortgage take into account various factors. The factors determine,in part, what interest rate the borrower will qualify for and evenwhether the mortgage loan is approved. One of these factors is the riskassociated with nonpayment by the borrower. The risk of nonpaymentrepresents the likelihood that the borrower will fail to make timelymortgage payments and possibly default on the mortgage loan—an outcomethat the lender prefers to avoid. As such, when the risk of nonpaymentis high, the lender may take one or more actions including (1) rejectingthe mortgage application, (2) approving the mortgage application at alower principal amount, (3) approving the mortgage application at ahigher interest rate when compared to a borrower with a lower likelihoodof nonpayment, and/or (4) requiring the borrower to make a larger downpayment. In essence, the mortgage terms and conditions attempt toaccount for the risk of nonpayment.

Generally, a lender gathers information about the borrower's credithistory, income, assets, and liabilities to assess the borrower'sability to repay the mortgage. With the information, the lenderdetermines the risk of nonpayment associated with the borrower'smortgage. However, once the borrower receives the mortgage, the borrowermay take additional loans against any equity in the mortgaged property.Indeed, even at the closing of a mortgage, a borrower may take a secondmortgage on the property from a different lender. For example, theborrower may use funds from a second mortgage to supplement the downpayment required to close the first (or original) mortgage on theproperty in cases where the first mortgage loan cannot exceed 80% of thevalue of the property. Similarly, the borrower may take a home equityline of credit (HELOC) against any equity in the mortgaged property. Inboth cases, the borrower has less of his own assets at stake when hedefaults on the mortgage loan because the borrower has increased thedebt and reduced equity in the property. Accordingly, second mortgagesand HELOCs significantly increase the risk of mortgage nonpayment, whichis a risk the lender seeks to avoid. More troubling, the first mortgagelender may be unaware of the second mortgage and HELOC and thus beunaware of the increased risk of mortgage nonpayment.

When a lender sells a mortgage to an investor, the investor of themortgage makes a purchase decision based on the perceived riskassociated with the mortgage. For example, an investor expects a higherrate of return when purchasing one or more mortgages with a higherlikelihood of nonpayment when compared to mortgages that are unlikely todefault. The same can be said for an investor in mortgage-backedsecurities: the investor expects a higher rate of return when investingin securities with a higher likelihood of nonpayment. However, theinvestor may be completely unaware of the second mortgage and HELOC andthe associated increased risk of mortgage nonpayment.

SUMMARY OF THE INVENTION

Accordingly, the present invention is directed to systems and methodsfor processing financial information. More particularly, the presentinvention is directed to systems and methods for providing a mortgage,wherein the mortgage includes a primary credit line (which serves as aninitial loan) and a sliding credit line, such that a borrower mayrequest to borrow against the sliding credit line as part of themortgage. Moreover, both the primary and sliding credit lines may beestablished at the creation of the mortgage and may be a first lien onthe mortgaged property.

A financial system consistent with the systems and methods of thepresent invention determine a level of risk associated with the borrowerbased on credit information of the borrower; establish a first creditline based on the determined level of risk associated with the borrower,the first credit line being set as a debt of the mortgage; establish asecond credit line based on the determined level of risk associated withthe borrower, the second credit line being set as a maximum to which thedebt of the mortgage may be increased during the mortgage; and offersthe mortgage to the borrower with the established first and secondcredit lines, such that a single first lien may serve as security forthe first and second credit lines.

Additional features and advantages of the invention will be set forth inpart in the description that follows and in part will be obvious fromthe description, or may be learned by practice of the invention. Theobjectives and advantages of the invention may be realized and attainedby the system and method particularly described in the writtendescription and claims hereof as well as the appended drawings.

To achieve these and other advantages and in accordance with the purposeof the invention, as embodied and broadly described herein, methodsconsistent with the present invention also increase a debt amountassociated with a mortgage secured by a single first lien that secures afirst credit line and a second credit line. Furthermore, the method mayinclude, for example, receiving a request for credit from the slidingcredit line, such that the sliding credit line represents a maximum towhich the debt amount of the mortgage may be increased during themortgage; determining a level of risk associated with a borrower of themortgage based on credit information of the borrower; and increasing thedebt amount by the request for credit based on the determined level ofrisk.

Moreover, in one embodiment consistent with the present invention, thereis provided a method of issuing securities backed by one or moremortgages, wherein at least one of the one or more mortgages is securedby a single first lien on a first credit line and a second credit line.The method includes, for example, issuing securities backed by a firstdebt based on the first credit line; determining whether the borrowerhas borrowed a second debt from the second credit line; and issuingadditional securities backed by the second debt.

It is to be understood that both the foregoing general description andthe following detailed description are exemplary and explanatory onlyand are not restrictive of the invention, as described. Further featuresand/or variations may be provided in addition to those set forth herein.For example, the present invention may be directed to variouscombinations and subcombinations of the disclosed features and/orcombinations and subcombinations of several further features disclosedbelow in the detailed description.

BRIEF DESCRIPTION OF THE DRAWINGS

The accompanying drawings, which are incorporated in and constitute apart of this specification, illustrate various embodiments and aspectsof the present invention and, together with the description, explain theprinciples of the invention. In the drawings:

FIG. 1 illustrates an exemplary system environment in accordance withsystems and methods consistent with the present invention;

FIG. 2 is an exemplary flowchart for providing a mortgage in accordancewith systems and methods consistent with the present invention;

FIG. 3 illustrates another exemplary system environment in accordancewith systems and methods consistent with the present invention.

FIG. 4 is another exemplary flowchart for providing (or offering) amortgage in accordance with systems and methods consistent with thepresent invention;

FIG. 5 is an exemplary flowchart for invoking the sliding credit lineassociated with the mortgage in accordance with systems and methodsconsistent with the present invention;

FIG. 6 is an exemplary flowchart for revising the payment(s) of themortgage; and

FIG. 7 is an exemplary flowchart for issuing securities in accordancewith systems and methods consistent with the present invention.

DETAILED DESCRIPTION

Reference will now be made in detail to the invention, examples of whichare illustrated in the accompanying drawings. Wherever possible, thesame reference numbers will be used throughout the drawings to refer tothe same or like parts.

Systems and methods consistent with the present invention permit alender to provide a mortgage, wherein the mortgage includes both aprimary credit line and a sliding credit line. The primary credit lineserves as an initial loan amount provided to the borrower. The slidingcredit line, on the other hand, may be invoked by the borrower duringthe term of the mortgage. Moreover, the sliding credit line may becapable of adjustment over the term of the mortgage as the value of themortgage property changes, i.e., as the mortgaged property increases invalue, the sliding credit line may increase. Because the lender providesa single mortgage that includes two pieces (the primary and slidingcredit lines), the lender may record a single first lien for both piecesof the mortgage—securing thus both pieces with the single first lien. Inaddition, since the sliding credit line is part of the first lien, theborrower does not need to acquire a separate mortgage to use the slidingcredit line.

In one embodiment, a lender may receive a borrower's mortgageapplication and then determine a level of risk associated with theborrower based on the borrower's mortgage application including theborrower's credit information predictive and information about the assetitself. The level of risk enables the lender to establish a primarycredit line and a sliding credit line from which the borrower mayrequest additional credit. The sliding credit line may be established asa maximum amount that limits the total amount of debt the borrower canrequest. Furthermore, when the mortgage is created, the sliding creditline may include conditions under which the borrower may request andreceive credit from the sliding credit line.

For example, the borrower may seek to purchase a home valued at $100,000and request a mortgage of $80,000. After analyzing the borrower's loanapplication (and credit information and other publicly availableinformation concerning the borrower, the home, etc.), the lender may forexample establish for the borrower a mortgage with a primary credit lineof $80,000 and a sliding credit line of $20,000. The lender may record afirst lien on the property of $100,000 (the total of the primary andsliding credit lines). But unlike the $80,000, which is simply providedat mortgage closing, the sliding credit line includes conditions underwhich the borrower can access the sliding credit line. In oneembodiment, the conditions may define (or require) one or more of thefollowing: a satisfactory credit history, a maximum loan-to-value ratioon the borrower's existing home (i.e., the already mortgaged premises),an applicable interest rate (e.g., prime plus 2%), how often the slidingcredit line may be accessed, how it may be accessed, when the slidingcredit line may be accessed, a requirement that a reappraisal of theproperty be provided, and a reassessment of the borrower's credit.

Because the borrower's mortgage payment represents only the principaland interest payments on the amounts actually borrowed the lenderincreases the principal owed, which is the debt, on the mortgage by theamount borrowed under the sliding credit line. For example, the lendermay initially compute a mortgage payment for the borrower thatrepresents the primary credit line. Then, when the borrower accesses thesliding credit line, the lender may then recompute the monthly paymentamount based on the principal and interest due on the primary creditline and on the principal and interest due on the sliding credit line.The borrower then pays this recomputed monthly payment for the term ofthe mortgage unless the borrower once again draws additional credit fromthe remaining credit in the sliding credit line. Since any amountsborrowed from the sliding credit line are secured under a single firstlien, the lender does not need to record additional liens. Moreover,amounts borrowed under the sliding credit line are secured by a firstlien with priority over any other lower priority liens, such as a secondlien securing a home equity loan.

For example, the lender may initially compute a mortgage based on theinitial loan (or debt) from the primary credit line, e.g., $80,000. Inthis example, if the borrower draws $10,000 (from the sliding creditline with an available balance of $20,000), the lender recomputes themonthly payment amount owed by the borrower based on $80,000 at x %interest rate (i.e., the principal and interest due on the primarycredit line) and on $10,000 at y % interest rate (i.e., the principaland interest due on the sliding credit line). The borrower then pays thenew (or recomputed) mortgage payment. In addition, the borrower maylater access the $10,000 remaining in the sliding credit line. In oneembodiment, the lender may automatically offer any funds in the slidingcredit line and/or increase or decrease the sliding credit line amount.

By using the sliding credit line, the lender is more aware of the totaldebt associated with the mortgaged property. The lender is also moreaware of the corresponding risk of nonpayment associated with theproperty. Furthermore, when the lender sells (or securitizes) themortgage or when mortgage-backed securities are sold, the mortgages (orsecurities) more accurately represent the corresponding risk ofnonpayment associated with the mortgages. Accordingly, the buyer of themortgage (or security) is also more aware of the corresponding risk ofnonpayment.

FIG. 1 shows an exemplary system 1000 for providing a mortgage with asliding credit line. In one embodiment, the sliding credit line isestablished at the creation (e.g., closing) of the mortgage, such thatthe borrower may request to borrow against the sliding credit line aspart of the original mortgage.

Referring to FIG. 1, the system 1000 includes a communication channel1400, one or more lenders 1500,1510, one or more borrowers 1600, 1610,information sources 1800, and a processor 1350. The lenders 1500, 1510may include a bank, mortgage bank, mortgage broker, mortgage originator,and any other financial entity. The borrowers 1600, 1610 may include anentity, such as a consumer, seeking a mortgage. The processor 1350 mayinclude an entity capable of processing the mortgage with the slidingcredit line, for example, the lender, a broker, a servicer, and anyother financial entity. The information sources 1800 may include one ormore of the following: a source of mortgage application information, asource of credit information for one or more borrowers (e.g., creditbureau information and/or credit scores), loan (or mortgage) paymenthistory, and property appraisal information.

Although the communication channel 1400 is depicted in FIG. 1 asbi-directional, a skilled artisan would recognize that unidirectionalcommunication links may be used instead.

FIG. 2 is an exemplary flowchart depicting steps for providing themortgage with a primary credit line (e.g., an initial loan) and asliding credit line consistent with one embodiment of the presentinvention. Referring to FIGS. 1 and 2, the lender 1500 may provide amortgage to a borrower 1600 that includes a sliding credit line, whichmay be borrowed against during the term of the mortgage (step 2100).When the borrower requests credit from the sliding credit line (step2200), the lender may determine whether the borrower satisfies theconditions for borrowing against the sliding credit line (step 2300). Ifthe borrower does not satisfy the conditions for accessing the slidingcredit line, the lender 1500 denies the borrower's 1600 request toaccess the sliding credit line (step 2350). Of course, the borrower muststill make payments on the outstanding mortgage. If the borrower doessatisfy the conditions, the lender revises the principal amountassociated with the borrower's mortgage (step 2400). The lender alsodetermines a revised mortgage payment that includes the originalprincipal amount from the primary credit line and the new amountborrowed from the sliding credit line (step 2500). The borrower 1600then pays the revised mortgage payment (step 2600). The borrower mayalso receive any funds from the sliding credit line.

In one embodiment, after mortgage closing (e.g., when the mortgage isprovided to the borrower in step 2100), the lender may record a singlefirst lien for the primary credit line and the sliding credit line—eventhough the borrower may decide not to borrow from the sliding creditline.

In one exemplary embodiment, the lender specifies two conditions foraccessing the sliding credit line. The first condition requires amaximum loan-to-value ratio (including any amount requested from thesliding credit line) that does not exceed 1.2. The second conditionrequires a satisfactory credit history (e.g., no late payments,delinquencies, and/or a FICO™ Score greater than 550). In thisembodiment, the borrower would need to satisfy both conditions to borrowfrom the sliding credit line (step 2300).

Although two conditions are described herein with respect to step 2300,this is only exemplary and should in no way be viewed as limiting sinceother conditions may be used instead. For example, a borrower may bepreapproved to receive funds from the sliding credit line. When that isthe case, the condition may only include receiving the request.

FIG. 3 illustrates another exemplary system environment 3000 consistentwith one embodiment of the present invention. As illustrated in FIG. 3,the system 3000 includes a processor 1350, lenders 1500, 1510, borrowers1600, 1610, brokers 1700, 1710, information sources 1800, and acommunication channel 1400. The processor 1350 may also include an inputmodule 3100, an output module 3200, a computing platform 3300, and oneor more databases 3600. The lenders 1500, 1510, brokers 1700, 1710, andborrowers 1600, 1610 may also include a computing platform 3300, inputmodule 3100, and/or output module 3200.

In one embodiment consistent with FIG. 3, the computing platform 3300may include a data processor such as a PC, UNIX server, or mainframecomputer for performing various functions and operations. Computingplatform 3300 may be implemented, for example, by a general purposecomputer or data processor selectively activated or reconfigured by astored computer program, or may be a specially constructed computingplatform for carrying-out the features and operations disclosed herein.Moreover, computing platform 3300 may be implemented or provided with awide variety of components or systems including, for example, one ormore of the following: one or more central processing units, aco-processor, memory, registers, and other data processing devices andsubsystems.

Communication channel 1400 may include, alone or in any suitablecombination a telephony-based network, a local area network (LAN), awide area network (WAN), a dedicated intranet, the Internet, a wirelessnetwork, or a bus. Further, any suitable combination of wired andwireless components and systems may be incorporated into thecommunication channel 1400. Although the computing platform 3300 mayconnect to the lenders 1500, 1510 through the communication channel1400, computing platform 3300 may connect directly to the lenders 1500,1510.

Computing platform 3300 also communicates with input module 3100 and/oroutput module 3200 using connections or communication links, asillustrated in FIG. 3. Alternatively, communication between computingplatform 3300 and input module 3100 (or output module 3200) may beachieved using a network (not shown) similar to that described above forthe communication channel 1400. A skilled artisan would recognize thatcomputing platform 3300 may be located in the same location or at ageographical separate location from input module 3100 or output module3200 by using dedicated communication links or a network.

Input module 3100 may be implemented with a wide variety of devices toreceive and/or provide information. Referring to FIG. 3, input module3100 may include an input device 3110, a storage device 3120, and anetwork interface 3130. Input device 3110 may also include a keyboard, amouse, a disk drive, a telephone, or any other suitable input device forreceiving and/or providing information to computing platform 3300.Although FIG. 3 only illustrates a single input module 3100, a pluralityof input modules 3100 may also be used.

Storage device 3120 may be implemented with a wide variety of systems,subsystems, and/or devices for providing storage (or memory) including,for example, one or more of the following: a read-only memory (ROM)device, a random access memory (RAM) device, a tape or disk drive, anoptical storage device, a magnetic storage device, a redundant array ofinexpensive disks (RAID), and/or any other device capable of providingstorage.

Network interface 3130 may facilitate data exchange between thecommunication channel 1400 and computing platform 3300 and mayfacilitate data exchange between the input module 3100 and the computingplatform 3300. In one embodiment, network interface 3130 may permit aconnection to at least one or more of the following networks: anEthernet network, an Internet protocol network, a telephone network, aradio network, a cellular network, or any other network capable of beingconnected to input module 3100.

Output module 3200 may include a display 3210, a printer 3220, and anetwork interface 3230. The output from computing platform 3300 may beviewed through display 3210 (e.g., a cathode ray tube or liquid crystaldisplay) and printer device 3220. Although FIG. 3 only illustrates asingle output module 3200, a plurality of spatially separated outputmodules 3200 may be used instead.

Network interface 3230 may facilitate data exchanges between the outputmodule 3200 and the computing platform 3300 and between the computingplatform 3300 and the communication channel 1400. In one embodiment, thenetwork interface 3230 may be similar to the network interface 3130described above.

The database 3600 may store information received from the lenders,borrowers, and/or information sources. For example, the database 3600may store one or more of the following: mortgage applicationinformation, credit information (e.g., credit history, outstandingliabilities, and/or credit scores), asset information, propertyappraisal information, loan (or mortgage) payment history, and incomeinformation. The database 3600 may also store information for one ormore borrowers. Although the database 3600 is shown in FIG. 3 as beinglocated with the computing platform 3300, a skilled artisan wouldrecognize that the database(s) may be located anywhere (and in multiplelocations) and connected to the computing platform via direct links ornetworks. Similarly, although the information sources 1800 are shown inFIG. 3 as being located separate from the computing platform 3300, askilled artisan would recognize that the information sources may belocated anywhere (and in multiple locations).

FIG. 4 shows another exemplary flowchart with steps for providing themortgage with a primary credit line and a sliding credit line consistentwith an embodiment of the present invention. Referring to FIG. 4, thecomputing platform begins when it receives a mortgage application (step4100). The computing platform 3300 may then determine a risk ofnonpayment associated with the borrower based on the mortgageapplication including the borrower's credit information (step 4200);establish a primary credit line and a sliding credit line based on therisk of nonpayment associated with the borrower (steps 4300-4400); andend by providing the mortgage with the primary and sliding credit linesto the borrower, such that a single first lien may serve as security forthe primary and sliding credit lines (steps 4500-4600).

The borrower 1500 may complete the mortgage application, which isreceived by the computing platform 3300 (step 4100). In one exemplaryembodiment, the borrower 1500 completes the mortgage application throughthe Internet by entering information requested on the mortgage loanapplication. For example, the mortgage loan application may include oneor more of the following information: borrower's name and address,address of the mortgaged property, income, employer, assets, andliabilities. The completed mortgage application is then received by thecomputing platform 3300 associated with the lender 1500.

The computing platform 3300 may also receive additional information fromdatabase 3600 or information sources 1800 additional information for theborrower, such as credit information (e.g., credit history, outstandingliabilities, and/or credit scores), asset information, loan (ormortgage) payment history, income information, and property appraisalinformation. As defined herein, the mortgage application may include theadditional information received from the database 3600 and/orinformation sources 1800. In one embodiment, the received informationmay include credit information from information sources that providecredit history, such as First American, Equifax, TransUnion, orExperian. The additional information may also include asset information,such as a real estate appraisal report (or other estimates of value)provided by DataQuick and IDM. Moreover, the property appraisal may bebased on an in-person appraisal (e.g., an inspection) or, alternatively,an automated appraisal (or estimate of value) using an automatedvaluation model (AVM), such as Home Value Explorer^(SM) (HVE).

The computing platform 3300 may then analyze the mortgage applicationincluding the borrower's credit information to determine a level of riskassociated with the borrower (step 4200). The level of risk associatedwith the borrower and the mortgage represents a likelihood that theborrower will fail to make timely payments and possibly default on themortgage or that the property will decline in value. The risk ofnonpayment may include, inter alia, the risk of late payment and therisk of default. This risk of nonpayment varies according to variousfactors. For example, a borrower with a poor credit history, such aslate payments and delinquencies, represents a higher level of nonpaymentrisk when compared to a borrower without a history of late payments anddelinquencies (i.e., a satisfactory credit history). Similarly, aborrower with excessive debt, insufficient income, or insufficientequity in the mortgaged property (e.g., a loan-to-value ratio equal toor greater than one) represents a higher level of nonpayment risk whencompared to a borrower with little debt, sufficient income, andsufficient equity in the mortgaged property. Accordingly, the computingplatform 3300 may determine the level of nonpayment risk associated withthe borrower before determining the credit lines for the borrower'smortgage.

In one embodiment, the computing platform 3300 may receive a propertyappraisal when determining the risk associated with the borrower. Thevalue of the mortgaged property, which is estimated by an appraisal,enables the computing platform 3300 to determine the loan-to-value ratioof the mortgage. For example, a property valued at $100,000 with aprimary credit line of $80,000 and a sliding credit line of $20,000would have a loan-to-value ratio of 0.8 (or 80%). If the sliding creditline is included, the loan-to-value is 1.0 (100%).

Although the entire sliding credit line may be included in theloan-to-value ratio determination, the computing platform 3300 mayalternatively compute the loan-to-value only on amounts actuallyborrowed. Returning to the above example, when the borrower makes arequest to borrow $10,000 from the sliding credit line of $20,000, thetotal loan amount corresponds to $90,000, i.e., the sum of $80,000(primary credit line) and $10,000 (sliding credit line). The propertyvalue may be equivalent to the original appraisal of $100,000. When thatis the case, the loan-to-value ratio is 0.9 ($90,000/$100,000).Alternatively, the computing platform 3300 may receive a reappraisal (ornew appraisal) for the property when the sliding credit line is invoked.For example, the property may have changed value, such as an increase to$150,000. When that is the case, the loan-to-value ratio corresponds to0.6 ($90,000/$150,000).

In one embodiment, a loan-to-value ratio of about 0.8 or less cancontribute to a lower risk (or likelihood) of nonpayment. Althoughloan-to-value is described in this example as a factor in determiningthe borrower's risk of nonpayment, any other information may also beused either alone or in combination with the loan-to-value ratio.

Based on the determined risk of step 4200, the computing platform 3300may then establish for the borrower a primary credit line and a slidingcredit line (steps 4300-4400). The computing platform 3300 may establishthe primary credit line so that it is sufficient to serve as the initialloan for the purchase of the property. For example, the primary creditline provides 80% of the purchase price, and the borrower makes a downpayment for the remaining 20%. On the other hand, the computing platform3300 may establish the sliding credit line as maximum amount from whichthe borrower 1500 may borrow. As noted above, the sliding credit linemay include one or more conditions that specify the terms under whichthe borrower may request and receive credit from the sliding creditline.

In one embodiment, the mortgage application includes, among otherthings, a loan amount requested by the borrower. The mortgageapplication and/or the credit information contained in a credit reportmay also include the number of open accounts in the credit report,account balances in revolving credit lines, account limits in revolvingcredit lines, other account balances, mortgage balances, mortgagepayments, tax payments, 30, 60, or 90 day delinquencies, foreclosures,and other information reported by credit repositories. Moreover, themortgage application may include (or be accompanied by) an appraisal ofthe property and verification of income and borrower assets. Forexample, based on information included in the mortgage application andcredit report, the computing platform 3300 may then determine theborrower's risk of nonpayment and establish the borrower's primarycredit line (which is preferably the loan amount requested by theborrower in the mortgage application) and sliding credit line.

The lender 1500, via the computer platform 3300 and communicationchannel 1400, may then provide the mortgage to the borrower with theprimary and sliding credit lines 1600 (step 4500). Moreover, the primaryand sliding credit lines may each include respective interest rates,either fixed or variable. The borrower 1500 then receives the amountrepresented by the primary credit line when the mortgage closes. Theborrower 1500 also receives the sliding credit line when, as notedabove, certain conditions are satisfied. Although the sliding creditline may be accessed by the borrower after closing, the borrower 1500may also request and receive funds from the sliding credit line as partof the closing.

Returning to the previous example above where the primary credit line is$80,000 and the sliding credit line is $20,000, the borrower receives$80,000 at mortgage closing which can be applied towards the purchase ofthe mortgaged property. The lender also records a lien against theproperty of $100,000 (i.e., the primary credit line and the slidingcredit line). Meanwhile, the borrower may request additional credit upto $20,000 over the term of the mortgage. For example, the borrower mayrequest $20,000 from the sliding credit line to help make the downpayment at closing, improve the mortgaged property, or payoff a debt. Inthis example, the mortgage includes a condition that limits theborrower's sliding credit line to a maximum loan-to-value ratio to 1.0(based on the primary credit line, the sliding credit line, and theproperty appraisal). However, any other loan-to-value ratio may be usedinstead, such as 0.8 or 1.5, for determining the lifetime borrowingamount.

FIG. 5 shows an exemplary flowchart with steps for requesting and thenproviding credit from the sliding credit line. Referring to FIGS. 3 and5, the computing platform 3300 may begin when it receives a request forcredit on a mortgage with a sliding credit line (steps 5205-5100). Thecomputing platform 3300 may then determine the risk of nonpaymentassociated with the borrower (step 5200); and determine whether theborrower satisfies conditions under which the borrower can access thesliding credit line (step 5300). If the borrower fails to satisfy theconditions, the computing platform 5400 may reject the request forsliding credit (step 5400). If the borrower satisfies the conditions,the computing platform 3300 may determine the amount available in thesliding credit line (step 5500). If the sliding credit line includes asufficient amount to cover the request for credit, the computingplatform 3300 may decrease the sliding credit line by the requestedamount; increase the mortgage amount by the amount requested by theborrower; and end by revising outstanding principal (also referred toherein as debt) associated with the mortgage (steps 5600-5805). If theavailable funds in the sliding credit line are insufficient to cover therequest, the computing platform 3300 may reject the request or,alternatively, notify the borrower that the sliding credit line (step5400) cannot cover the request.

To borrow from the sliding credit line, the computing platform 3300receives a request from the borrower 1500. In one embodiment, thecomputing platform 3300 receives the request from the borrower 1500 overthe communication channel 1400, such as the Internet. The receivedrequest may also indicate the amount requested from the sliding creditline.

When the request is received, the computing platform 3300 determines thenonpayment risk associated with permitting the borrower to access thesliding credit line (step 5200). This nonpayment risk includes thelikelihood that the borrower defaults on the mortgage represented by theadded debt of the sliding credit line. In one embodiment, the borrower'sFICO™ Score is used to determine the risk of nonpayment. For example, aborrower with a FICO™ Score of less than 500 may represent a significantrisk of nonpayment. The original primary credit line and the addedsliding credit line are processed to determine the risk as in step 4200.

To determine whether to allow access to the sliding credit line (step5300), the computing platform 3300 may grant access based on thedetermined risk of step 5200. Moreover, the computing platform 3300 maydetermine whether to allow access by considering certain conditionsunder which the borrower may access the sliding credit line. Forexample, the conditions, which may be defined in the mortgage, mayinclude one or more of the following: a satisfactory credit history(e.g., no delinquencies, late payments, a satisfactory credit score,such as the FICO® Score); a maximum installment debt-to-income ratio; arecent appraisal report for the mortgaged property; a maximumloan-to-value ratio on the mortgaged property; how often the slidingcredit line may be accessed; when the sliding credit line may beaccessed; how the sliding credit line may be accessed; and an applicableinterest rate (e.g., prime plus 2%). If the conditions are satisfied(yes at step 5300), the lender 1500 may conclude that the riskassociated with permitting access to the sliding credit line isacceptable.

If the conditions are satisfied, the computing platform 3300 may alsodetermine whether the existing sliding credit line is sufficient tosatisfy the request (step 5500). For example, if the sliding credit lineis $5000 and the borrower requests $10,000, the computing platform 3300should deny the request to access the sliding credit line because thesliding credit line is insufficient to satisfy the request (no at step5500). On the other hand, if the amount of sliding credit is larger (orequal to) the amount requested, the computing platform 3300 approves therequest and decreases the amount of available sliding credit by therequested amount (step 5600). For example, if the sliding credit line is$30,000 and the borrower requests $10,000, the sliding credit line issufficient. As a result, the computing platform 3300 approves therequest and decreases the available amount of sliding credit by $10,000.In this example, the borrower 1500 still has $20,000 of sliding creditthat is available for possible future use.

In one embodiment, the computing platform may, as part of step 5500,request an appraisal report from a traditional in-person appraiser (orinspection) or an AVM. The computing platform 3300 may then determinewhether to adjust the sliding credit line based on the appraisal. Forexample, if the appraisal indicates an increase in value for themortgaged property, the sliding credit line may be increased. Similarly,if the value, loan-to-value, or other factors, indicates a decrease, thesliding credit line may be reduced.

The computing platform 3300 also increases the principal owed on themortgage by the amount requested (step 5700). For example, if theoutstanding principal is $100,000 and the borrower requests and isapproved for $20,000 in sliding credit, the borrower's outstandingmortgage principal increases to $120,000. The computing platform 3300then revises the mortgage payment based on the revised principal of120,000 (step 5800).

FIG. 6 shows an exemplary flowchart with steps for providing theborrower with a mortgage payment based on the primary credit line andany amounts requested from the sliding credit line. Referring to FIG. 6,the computing platform 3300 may determine—and if necessary store indatabase 3600, a first interest rate corresponding to the primary (ororiginal) outstanding principal amount of the mortgage (step 6100). Forexample, the first interest rate may correspond to the prevailingmortgage rate at mortgage closing (see, e.g., FIG. 4, step 4500).

When the borrower requests credit from the sliding credit line, thecomputing platform 3300 may determine—and if necessary store in database3600, a second interest rate corresponding to the amount of creditrequested from the sliding credit line (step 6200). In one embodiment,the second interest rate may be fixed or variable. If the secondinterest rate is variable, it may be based on the prime interest rateplus a fixed percentage (e.g., prime interest rate plus 1%). Althoughthis exemplary embodiment describes a second interest rate, multipleinterest rates may be stored in database 3600. Each of the interestrates may correspond to a separate amount borrowed from the slidingcredit line.

To determine the borrower's mortgage payment, the computing platform3300 calculates the principal and interest due for each piece of themortgage. That is, the computing platform 3300 computes the payment duebased on the primary (or original) outstanding principal using the firstinterest rate and computes the payment due based on the amount requestedfrom the sliding credit line using the second interest rate. In thisexample, the mortgage payment essentially consists of (1) a firstmortgage payment calculated based on the primary principal and interestand (2) a second mortgage payment calculated based on the amount drawnfrom the sliding credit line and its corresponding interest rate.Although in this embodiment the computing platform 3300 separatelydetermines the first and second mortgage payments, the borrower simplymakes a single mortgage payment consisting of the sum of the first andsecond mortgage payments. Of course, the borrower's total mortgagepayment may also include taxes and insurance. In one embodiment, amortgage servicer may provide a bill reflecting the borrower's mortgagepayment, i.e., the sum of the principal and interest payments on thefirst and second mortgage payments and any applicable taxes and/orinsurance. When that is the case, the borrower makes the mortgagepayment to the mortgage servicer. The mortgage servicer then pays anyreceived payments to the holder of the mortgage note.

FIG. 7 shows an exemplary flowchart with steps for issuing securitiesbacked by mortgages with the sliding credit line. Referring to FIG. 7,the lender 1500 may issue (or sell) securities backed by the outstandingdebt associated with the primary credit line (step 7100). The lender1500 may also determine whether the sliding credit line is accessed bythe borrower (step 7200). If so, the lender 1500 may issue additionalsecurities backed by the debt corresponding to the sliding credit line(step 7300).

In one exemplary embodiment, the lender 1500 may issue securities backedby the debt of the primary credit line (step 7100). In one embodiment,computing platform 3300 may build (store in database 3600, and/or sendvia communication channel 1400) a data structure including one or moreof the securities to be sold to investors. Investors may then purchasesecurities backed by the primary credit line debt. The lender 1500 mayhold the primary credit line debt in a mortgage pool, which may also bestored and/or sent as a data structure. As principal and interestpayments are made, the purchasers of the mortgage-backed securities arepaid dividends, and the underlying debt in the mortgage pool is alsoserviced. Mortgage backed securities are described in detail by E.Baldwin and S. Stotts in the book titled Mortgage Backed Securities: AReference Guide For Lenders and Issuers, 1990, which is incorporatedherein by reference in its entirety.

The sliding credit line, which represents an unexercised future debt,may also be held (or pooled) by the lender 1500 until the borrower drawsfrom the sliding credit line. In one embodiment, the held debt may alsobe stored as a data structure in database 3600 (or storage 3120) and/orsent via communication channel 1400. When the borrower draws (orborrows) from the sliding credit line, the computing platform 3300associated with the lender 1500 receives an indication that the slidingcredit line has been accessed (step 7200). When that occurs, lender 1500may pool (or hold) the debt of the sliding credit line debt separatelyfrom the debt associated with the primary credit line.

Moreover, the sliding credit line debt may be issued as securities,which are separate from the securities issued on the primary credit debt(step 7300). Alternatively, the lender 1500 may decide to keep thesliding credit line debt in a pool, and invest the income paid by theborrower. In either case, the borrower's mortgage payment is apportionedinto at least two: a piece for the primary credit line debt and a piecefor the sliding credit line debt. Each piece is applied to itsrespective pool such that the payments are made to satisfy mortgagenotes and/or dividend payments to investors.

Although the above description of FIG. 7 refers to the lender 1500, askilled artisan would recognize that a lender's representative, such asa broker or trustee, may be used instead. For example, a trustee may beresponsible for pools of debt representing the sliding credit line(s)and/or the primary credit line(s). When the sliding credit line debt isissued as a security, the mortgage servicer would make principal andinterest payments directly to the trustee. The trustee then pays anyinvestor dividends and pays the mortgage note.

Although the above embodiment describes separate treatment for theprimary and sliding credit lines, a skilled artisan would also recognizethat the lender 1500 may instead pool and sell the primary credit linedebt and the sliding credit line as part of a single mortgage-backedsecurities issuance.

In one embodiment, the computing platform 3300 may interface with, or beembedded in, one or more systems (not shown), that provide financialinformation, credit information, or real estate information. Suchsystems include, for example, systems that are used to originatemortgages.

Furthermore, although the embodiments above refer to processinginformation related to mortgages in its broadest sense systems andmethods consistent with the present invention may provide any type ofloan, credit instrument, or line of credit with a primary part and asliding part.

The systems disclosed herein may be embodied in various forms including,for example, a data processor, such as a computer that also includes adatabase. Moreover, the above-noted features and other aspects andprinciples of the present invention may be implemented in variousenvironments. Such environments and related applications may bespecially constructed for performing the various processes andoperations of the invention or they may include a general-purposecomputer or computing platform selectively activated or reconfigured bycode to provide the necessary functionality. The processes disclosedherein are not inherently related to any particular computer or otherapparatus, and may be implemented by a suitable combination of hardware,software, and/or firmware. For example, various general-purpose machinesmay be used with programs written in accordance with teachings of theinvention, or it may be more convenient to construct a specializedapparatus or system to perform the required methods and techniques.

Systems and methods consistent with the present invention also includecomputer readable media that include program instruction or code forperforming various computer-implemented operations based on the methodsand processes of the invention. The media and program instructions maybe those specially designed and constructed for the purposes of theinvention, or they may be of the kind well known and available to thosehaving skill in the computer software arts. Examples of programinstructions include, for example, machine code, such as produced by acompiler, and files containing a high level code that can be executed bythe computer using an interpreter.

Turning to the nomenclature of the specification, the detaileddescription above is represented largely in terms of processes andsymbolic representations of operations performed by conventionalcomputer components, including a central processing unit (CPU), memorystorage devices for the CPU, and connected pixel-oriented displaydevices. These operations include the manipulation of data bits by theCPU, and the maintenance of these bits within data structures residingin one or more of the memory storage devices. Such data structuresimpose a physical organization upon the collection of data bits storedwithin computer memory and represent specific electrical or magneticelements. These symbolic representations are the means used by thoseskilled in the art of computer programming and computer construction tomost effectively convey teachings and discoveries to others skilled inthe art.

For purposes herein, a process is generally conceived to be a sequenceof computer-executed steps leading to a desired result. These stepsgenerally require physical manipulations of physical quantities.Usually, though not necessarily, these quantities take the form ofelectrical, magnetic, or optical signals capable of being stored,transferred, combined, compared, or otherwise manipulated. It isconventional for those skilled in the art to refer to these signals asbits, values, elements, symbols, characters, terms, objects, numbers,records, files, etc. However, these and similar terms should beassociated with appropriate physical quantities for computer operations.These terms are merely conventional labels applied to physicalquantities that exist within and during computer operation.

1. A computer-implemented method of issuing securities backed by one ormore single sliding equity mortgages, said method comprising: securingat least one of the single sliding equity mortgages with a maximumamount of debt, each single sliding equity mortgage constituting theonly mortgage for a property; issuing, using a computer, securitiesbacked by an initial amount of debt that is less than the maximum amountof debt for the at least one single sliding equity mortgage;determining, using the computer, that a second amount of debt has beensecured with the at least one single sliding equity mortgage subsequentto origination of the at least one single sliding equity mortgage; andissuing, using the computer, securities backed by the second amount ofdebt, wherein: the maximum amount of debt associated with the at leastone single sliding equity mortgage is dynamic and changes dynamicallyafter the closing based on appreciation or depreciation of an underlyingasset associated with the at least one single sliding equity mortgage.2. The method of claim 1, further comprising building a data structurefor the initial amount of debt.
 3. The method of claim 2, furthercomprising storing said data structure.
 4. The method of claim 2,further comprising sending said data structure to a purchaser of saidinitial amount of debt.
 5. The method of claim 2 further comprisingsending said data structure to a broker of said initial amount of debt.6. A system of issuing securities backed by one or more single slidingequity mortgages, said system comprising: a processor; and a memory,wherein the processor and the memory: process data representing each ofthe one or more single sliding equity mortgages, each of the one or moresingle sliding equity mortgages being secured by a corresponding maximumamount of debt and being the only mortgage for a property; issuesecurities backed by an initial amount of debt that is less than themaximum amount of debt for the one or more single sliding equitymortgages; determine that a second amount of debt has been secured withthe one or more single sliding equity mortgages subsequent toorigination of the one or more single sliding equity mortgages; andissue securities backed by the second amount of debt, wherein: themaximum amount of debt associated with each of the one or more singlesliding equity mortgages is dynamic and changes dynamically after theclosing based on appreciation or depreciation of an underlying assetassociated with each of the one or more single sliding equity mortgages.7. A computer program product for issuing securities backed by one ormore single sliding equity mortgages, comprising: a tangible computerreadable storage medium comprising instructions which, when executed bya processor, perform a method including: processing data representingeach of the one or more single sliding equity mortgages, each of the oneor more single sliding equity mortgages being secured by a correspondingmaximum amount of debt and being the only mortgage for a property;issuing securities backed by an initial amount of debt that is less thanthe maximum amount of debt for the one or more single sliding equitymortgages; determining that a second amount of debt has been securedwith the one or more single sliding equity mortgages subsequent toorigination of the one or more single sliding equity mortgages; andissuing securities backed by the second amount of debt, wherein: themaximum amount of debt associated with each of the one or more singlesliding equity mortgages is dynamic and changes dynamically after theclosing based on appreciation or depreciation of an underlying assetassociated with each of the one or more single sliding equity mortgages.